Middle East IPOs: Is this time different?
As the Gulf IPO boom subsides, will better allocations for international investors, dual listings and better secondary-market liquidity be enough to ensure that the region’s equity capital markets can mature?
The Middle East has been the biggest beneficiary by some margin of geopolitical turmoil in recent years. Driven by both the price of oil and the search for a relatively safe haven, new money has flowed to the region. The result has been an IPO boom, thanks to the dearth of issuance elsewhere.
Some steps have already been taken to take advantage of international attention. Among the region's exchanges, Saudi Arabia’s Tadawul Group, the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) have made comprehensive regulatory changes to bring their markets in line with international standards, such as loosening foreign-ownership requirements. The UAE even changed its weekends to allow trading on Fridays.
The changes have borne fruit. Riyadh, Abu Dhabi and Dubai have seen a flurry of IPOs, and the increase in investor attention is such that new asset managers are now setting up in the region. The momentum created by state-backed enterprise IPOs has prompted a series of private companies to list too, among them franchise operator Americana Restaurants, financial services firm Al Ansari and education provider Taaleem.